Date: 22 June, 2024
The Swiss National Bank (SNB) has made a historic announcement, declaring itself the first central bank globally to conduct a monetary policy operation using distributed-ledger technology (DLT) in a live production environment. This groundbreaking achievement was revealed during a press conference held in Zurich on June 20. The conference initially covered updates on inflation and the Swiss economic outlook before shifting focus to fintech innovations, with a particular emphasis on the wholesale central bank digital currency (CBDC) pilot initiative known as ‘Project Helvetia’.
At the center of the announcement was the successful issuance of digital SNB bills on the SIX Digital Exchange (SDX). The SDX, a platform dedicated to tokenized assets and a sibling to Switzerland’s main stock exchange, the SIX Swiss Exchange, played a crucial role in this development. The digital bills, issued at the beginning of June, had an issuance volume of CHF 64 million (approximately £56.6 million or $71.6 million) and a one-week term. This milestone marks a significant advancement in the application of DLT in central banking operations. Project Helvetia, which is already in its third stage, will continue for at least two more years with an expanded scope, the SNB announced. The third stage of this ambitious pilot program began in December 2023 and was initially set to conclude at the end of June 2024. However, due to the project’s success and potential, the SNB has decided to extend its duration and broaden its scope. The pilot program has positioned the SNB as a global leader in deploying wholesale CBDC in a live production environment. The central bank expressed hope that additional financial institutions will join the initiative over time, enabling wholesale CBDC to be used for a broader range of financial transactions.
The SNB’s pioneering efforts in utilizing DLT for monetary policy operations represent a significant milestone not only for Switzerland but also for the global financial system. By integrating DLT into its monetary policy framework, the SNB has demonstrated the practical viability and potential benefits of using advanced technology to enhance financial stability and efficiency.
The extension and expansion of Project Helvetia underline the SNB’s commitment to innovation and its proactive approach to exploring new frontiers in central banking. The insights gained and the infrastructure developed through this initiative are expected to have far-reaching implications, potentially setting new standards for central banks worldwide. The SNB’s call for broader participation from financial institutions highlights the collaborative nature of this initiative. By involving a diverse range of stakeholders, the central bank aims to create a more inclusive and robust financial ecosystem. The successful implementation of wholesale CBDC in a live environment paves the way for its application in various financial transactions, from interbank settlements to more complex financial instruments. As Project Helvetia progresses, it will serve as a valuable model for other central banks considering the adoption of DLT and CBDCs. The lessons learned and the best practices established by the SNB will provide a blueprint for future innovations in the global financial system. The Swiss National Bank’s successful deployment of distributed-ledger technology in a live production environment marks a significant advancement in the realm of central banking. Through Project Helvetia, the SNB has positioned itself at the forefront of financial innovation, demonstrating the transformative potential of DLT and CBDCs. As the project continues to evolve and expand, it promises to reshape the landscape of global finance, driving greater efficiency, transparency, and inclusivity in the years to come.
Key Points:
- On June 20, the SNB announced the world’s first monetary policy operation using DLT.
- The announcement was made at a Zurich press conference with updates on inflation and the Swiss economy.
- Focus was on fintech innovations, particularly the wholesale CBDC pilot, ‘Project Helvetia’.
- In early June, the SNB issued digital bills worth CHF 64 million on the SIX Digital Exchange.
- These token-based bills had a one-week term.
- Project Helvetia, now in its third stage, will continue for at least two more years with an expanded scope.
- The pilot program has established the SNB as a leader in deploying wholesale CBDC in a live production environment.
- The SNB aims for more financial institutions to participate, broadening the range of wholesale CBDC transactions.
- Wholesale CBDC (wCBDC) is for interbank use, unlike retail CBDC meant for everyday transactions by the public.
References:
https://www.globalgovernmentfintech.com/snb-tokenised-monetary-policy-operation/Â